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Forex is the closest one can get to making money seemingly from thin air. There is no employees to manage, property to maintain or customers to please. You simply use data and strategy to predict the direction of a stock. And for most people, this can seem too easy… until they delve in and fail to make a profit . The fact is most people fail to make any profit with forex. As a result, they label it or scam or too tricky.
For a small percentage of people, forex is how they put food on the table and a roof over their heads. They have developed a trading system which provides them with predictable income. And depending on their strategy, they can work a few hours a week and still have all their bills covered. And because they can trade from anywhere with an internet connection, they are also free to travel and pursue various interests. And they aren’t exceptionally intelligent or talented. Some dropped out of school early or only recently heard about forex. However, they all possess certain habits which I will be sharing with you.
Treat forex like a business
Did you know that entrepreneurs work longer hours than employed people? Just like any business, forex trading doesn’t always go smoothly. Therefore, you will need to prepare for dips by saving money. Secondly, you can’t improve what you don’t measure. Therefore, record keeping is vital. You need to know the following metrics like the back of your hand:
- Capital
- Accuracy rate
- Daily profit
- Trading frequency
The aim is to increase the above metrics so that you get better over time.
You can’t perform at your best without the right tools. Therefore, you need to have a good trading environment in order to implement various strategies. Personally, I have an inexpensive large desk, bookshelf, dual monitors and fast pc. I also like to keep a notebook on my desk for jotting down any tips I come across. I am fairly ‘old school’ and just think better while writing.
You don’t need an elaborate environment, but minimal distractions and quietness are important. My family know my trading schedule and try not to distract me during those hours. If your home is exceptionally noisy, listen to some classical music through headphones while you trade.
The mindset of a full-time trader
One of the main reasons why people don’t succeed is because they quit too early. We live in a world of instant gratification. A person will begin forex trading with $500 and expect to be a millionaire in a month. They were lied to about how easy it is, and get disappointed when it is anything but. You need to be exceptional to make a huge profit from forex. This means having the right habits and a growth mindset.
You need to treat forex as a full-time job. If you go to work whenever you feel like, your boss will eventually fire you. However, there are no repercussions for taking gaps of weeks or even months in between trading sessions. If you stop using a muscle, it undergoes atrophy. It wastes away. Similarly, if you don’t stay consistent with trading, you lose the skills and need to begin all over again.
Traders vs gamblers
Gambling can add a little more excitement to your life. However, over time, you are likely to lose money. Notably, poor people gamble more than rich people because it is viewed as a fast way to wealth. I have nothing against gambling. The issue is when people approach forex with a gambling mindset. They resort to guessing their trades or taking unnecessary risks. A full-time forex trader can’t afford to take unnecessary risks. Their earnings from trading is what feeds their family.
Notably, most brokers use similar cues to ones you will find in a casino. They use audio and visuals to keep you excited about trading. As a result, some traders can get into a state whereby they don’t care about the result. They keep depositing money and trading as if it is a video game. After a few hours, they end up losing thousands or tens of thousands of dollars. You can combat this by turning off the sound while you trade and keeping track of results. If you aren’t making money, stop and restrategize.
Big risks equal big rewards. However, the thought of ‘winning’ a significant sum of money can lead to highly risky trades. This is due to a lack of patience. To become a full-time forex trader, you need to be able to manage risk.
Risk management
When you trade with emotions, you are more likely to make wrong choices. For instance, a trader in a bad run of form might decide to deposit a large sum of money and risk it all on one trade in the hopes of “making it all back”.
Top forex traders are like hunters. They wait for the perfect opportunity to make a trade and then pull the trigger. Plus, they only play the situation in front of them. A long run of wins can have as much of a negative impact as losses. You can become overconfident and start to guess your trades. You need to detach yourself from the trading situation and only focus on the data . This can be very difficult to do, which is why some people rely on forex robots to perform most of the repetitive tasks.
I only started to trade with real money 6 months after deciding to become a forex trade. Until then, I used a demo account during my lunch breaks at work. I practised and implemented various strategies until I could predict how much I would make on any given day. If I had spent money right from the beginning, it would have cost me thousands of dollars to reach the same point. Forex brokers will entice you with bonuses to encourage you to make a substantial deposit.
Psychologically, trading on a demo account is different from trading with real money. An element of risk is added with a live account. Learning how to control your emotions and manage risk is a crucial part of becoming a top, full-time forex trader.
Cash management
You need to be disciplined about how much you risk per trade. Top traders keep it at 2-4 % of capital. Amateurs try to burn through their cash as quickly as possible. This adds unnecessary risk.
Some ‘gurus’ encourage their students to borrow as much money as possible. Sometimes they link it to “having a strong mentality” and believing in “the system”. A rule of forex is never to risk more than you are willing to lose. I trade expecting to lose it all. Losing streaks can be uncontrollable. It is a lot tougher to control your emotions if you are about to lose your life savings. Forex can be a quick way to make money, but it is also a fast way to lose it all. You must exercise self-control .
Moreover, cash is to forex as blood is to the heart. If you burn through your capital on high-risk trades, how can you continue? You will need to return back to a full-time job and make less in a day than a forex trader can make in a few seconds.
Before going full time, I made sacrifices to save as much money as possible. I even worked overtime and rode the bus to work. I knew that it might take a while to see consistent profits; therefore, I had 4 months worth of living expenses saved. Fortunately, it went well sooner than I expected, and I was able to spend more time doing what I love. I no longer had to wake up early in the morning to get ready for a job I hated. Forex has its’ challenges, but I don’t miss my previous life.
Final thoughts
Becoming a full-time forex trader is one of the challenging things you will ever do. However, it is also one of the most freeing things you will ever achieve. How would it feel to have greater control of your earning power?
This is something few people ever realize and you can get there by training every day, and following the tips above. Just to recap, here is what we covered in this article:
